The Country Land and Business Association (CLA) has condemned Budget 2025, after Rachel Reeves announced the freezing of the agriculture budget at 2014 levels, representing a cut in real terms, as well as a capping of agricultural property relief (APR).
The newly elected Labour government has also targeted inheritance tax reliefs in their first budget in 14 years, which the CLA claims will have a profound impact on farms across the country.
From April 2026, the first £1 million of combined business and agricultural assets will continue to attract no inheritance tax, but for assets over £1 million inheritance tax will apply with 50% relief, at an effective rate of 20%, the chancellor confirmed.
CLA
In response to the budget announcement, CLA president, Victoria Vyvyan said: “The government was elected on a promise of growth, but has done nothing for the countryside but freeze the agriculture budget and raise taxes.
“Labour has made repeated assurances over the last 12 months that it would not tamper with inheritance tax reliefs, and its decision to now rip the rug from under farmers is nothing short of a betrayal.
“This puts dynamite beneath the livelihoods of British farming, and flies in the face of growth and investment. We estimate that capping agricultural property relief at £1 million could harm 70,000 UK farms, damaging family businesses and destabilising food security.
“In its attempts to raise more revenue the government will cause great damage, jeopardising the future of rural businesses up and down the country. Many farmers, operating on slim margins, will now face having to sell land to pay inheritance taxes,” she added.
The CLA recently conducted a survey which found that 80% of respondents said they ‘strongly agreed’ or ‘agreed’, that farm payments are critical to ensuring their farm viability.
Vyvyan asserted that the decision to freeze the budget at the same level since 2014 will have consequences for hard-pressed farmers, consumers and the environment, damaging confidence and stability across the industry while compromising farm profitability.
“Defra’s proposal to accelerate the end of direct payments would be incredibly damaging to investment in farming and diversified businesses, it could hit sustainable food production and undermine improvements to wildlife habitats, flood management and access to nature.
“At a time of profound change in the industry, adjusting to new agricultural policies, the government is offering no vision for a positive economic future for us in the rural community. We will continue to argue the case for these vital reliefs.
“There is enormous growth potential in the countryside, but we need the government to be working with us, not against us,” she added.
